OUR INITIATIVES: ENVIRONMENTAL FOOTPRINT AND PERFORMANCE

We strive to continuously improve the quality of our environmental data, and enhance our understanding of our environmental performance. Our energy and water usage, as well as our greenhouse gas emissions for 2014 can be found in detail in our Environmental Performance Summary. In 2012, we began tracking our waste diversion at our corporate operations, and this year we have continued to collect and refine this data. Details on our 2014 waste profile are also shared below.

*In 2012, we expanded our reporting to include energy, water and GHG emissions data for U.S. standard restaurants

Energy usage (electricity, natural gas, propane and mobile combustion sources), water and GHG emissions: Energy usage, water usage and GHG emissions reflect either actual usage/emissions or have been estimated to account for year-end consumption.

Tim Hortons: Tim Hortons refers to corporate offices, manufacturing facilities (Maidstone coffee roasting plants and Fruition Fruits & Fills), Canadian and U.S. corporate owned standard restaurants and distribution centres. Unlike most other quick service restaurant companies, Tim Hortons employs significant use of vertical integration. Please see the Value Chain section of this Report for more information about our unique business model. Due to data limitations, the impact of corporate owned non-standard restaurants is not included at this time. As at December 31, 2014, the Company owned four non-standard restaurants. Corporate restaurants which were owned for less than a calendar month have been excluded.

Direct energy: Direct energy use represents the consumption of natural gas, propane, and fuel for mobile combustion sources (diesel and gas for corporate vehicles). Direct energy is recorded on an as-billed basis, and not on an as-consumed basis, for the calendar year.

Indirect energy: Indirect energy use represents the consumption of purchased electricity. Indirect energy is recorded on an as-billed basis, and not on an as-consumed basis, for the calendar year.

Water: Water consumption is recorded on an as-billed basis, and not on an as-consumed basis, for the calendar year. In addition, water usage information is not available for our Lachine, QC corporate offices as this location is not owned directly by Tim Hortons. Instead, water for this location is managed by the respective landlords. Finally, in 2014 water consumption for our Dublin, OH corporate office location was added to the boundary as a result of changes in information availability.

Greenhouse gas (GHG) emissions: GHG emissions are measured in units of carbon dioxide equivalent (CO2e). GHG emissions were calculated using the most recent emission factors available from the GHG Protocol Initiative of the World Business Council for Sustainable Development (WBCSD); the provincial emissions factors available from the Environment Canada National Inventory Report, Green House Gases Sources and Sinks in Canada 1990–2012: The Canadian Government's Submission to the UN Framework Convention on Climate Change (April 2014); and the United States Environmental Protection Agency’s eGrid 2009. Due to data limitations, emissions related to refrigerants are not included at this time.

Restaurants: Over 99% of our restaurants are franchised and independently operated. The energy, water, and GHG emissions data represent Canadian and U.S. franchisee-owned standard restaurants, which represent approximately 70% of total standard and non-standard restaurants in Canada and 59% of total standard and non-standard restaurants in the U.S. All International restaurants, Canadian and U.S. non-standard restaurants, and kiosks are excluded at this time. For all years shown, figures have been modeled using a sample of actual data from restaurants across Canada and the U.S.. In 2012, we expanded our reporting to include energy, water, and GHG emissions data for U.S. standard restaurants. In prior years only energy, water, and GHG emissions data for Canadian standard restaurants were included.

Energy usage and corporate travel for the Tim Hortons Children’s Foundation (‘THCF’); and

Energy usage from franchised-owned restaurants.

THCF GHG emissions: The THCF is an independent charitable entity that is not under the operational control of Tim Hortons. The THCF operates six children’s camps (five located in Canada and one located in the United States) and a head office (located in Canada). THCF GHG emissions include emissions attributed to electricity, natural gas, and propane consumption; gasoline and diesel consumption for vehicles; and commercial air travel. All THCF GHG emissions are considered Scope 3 emissions.

Total Net CO2e Emissions: Total netCO2e emissions include CO2e reductions from green power purchases of renewable energy from Bullfrog Power during the year. The amount of CO2e reductions is provided by Bullfrog Power. In 2014, a total of 148.78 megawatt hours were purchased from Bullfrog Power, which is the equivalent of 25.2 tonnes of CO2e reduction.

Energy and Water Footprint

In 2014, our gross energy consumption for both our corporate operations and our franchised restaurants(1) remained at approximately the same level as in 2013(2). Energy consumption did not increase despite the fact that our annual revenue increased in 2014 and the number of restaurants in our chain expanded. Energy efficiency and conservation initiatives allowed us to be more efficient in our use of energy in our corporate operations and more efficient at restaurants.

We saw a significant decrease in water consumption in both our corporate operations and restaurants(1) in 2014. Gross water consumption decreased by 7% for our corporate operations, and remained flat at the restaurant level, and we improved our water consumption efficiency. The most significant savings in water consumption for our corporate operations was the result of limiting irrigation of green spaces during summer months at our Head Office. We also replaced all irrigation sprinkler heads with low flow heads and upgraded the irrigation controllers to include rain sensors.

We will continue to evaluate opportunities to implement more energy efficiency and conservation programs across our corporate operations and through restaurant design. For more information on these initiatives, click here.

(1) Refers to Canadian and U.S. standard restaurants only.

(2) Please see the footnotes for our Environmental Performance Summary for further details.

Our Greenhouse Gas Emissions

Our total gross greenhouse gas (GHG) emissions for 2014 were 381,696 tonnes of CO2e. The largest portion of our GHG emissions were generated by our restaurants, which represents approximately 87% of our total emissions.(1) Emissions generated by Tim Hortons corporate operations(2) represented only 12% of our total emissions, and approximately 47% of those emissions were generated by our distribution fleet.

In 2014, our total GHG emissions remained flat (0.2% increase) compared to 2013. This can primarily be attributed to efforts to reduce corporate travel, which offset the additional emissions resulting from an increase in restaurant sales. Our distribution fleet has also continued to make improvements in fuel consumption, increasing fuel efficiency by 12.5% since our 2008 baseline.

(1) Refers to Canadian and U.S. standard restaurants only.

(2) Please see the footnotes for our Environmental Performance Summary for further details.

For a specific breakdown of Tim Hortons GHG emissions, please see the charts below.

The first chart represents our GHG emissions for our operations (scopes 1, 2 and 3), excluding the Tim Horton Children’s Foundation and Canadian and U.S. standard restaurants, broken down by category.

The second chart represents all GHG emissions (scopes 1, 2 and 3) in our reporting boundary, including Tim Hortons, the Tim Horton Children’s Foundation and Canadian and U.S. standard restaurants.

Our Waste Profile

In 2014, we continued to track the waste created by our operations: offices, manufacturing and distribution. Our goal was to increase our diversion rate by 10% across our operations by the end of 2014. As of the end of 2014, we had an overall diversion rate of 77%, an 11% improvement from the baseline year 2012. While this rate has exceeded our goal of a 10% increase in diversion, we are continuing to focus on improving our recycling and organics diversion programs and identifying measures to reduce the amount of waste going to landfills.

A few highlights of our progress in 2014 include the following initiatives:

Our Coffee Roasting Facilities focused on finding a solution for diverting metalized plastic film from landfill. The aim is for this new recycling program to be introduced in 2015.

The table below outlines the total weights for waste, recycling and organics diversion at our corporate offices, manufacturing facilities and Distribution Centres, including the change in waste diversion rates since 2012.

Waste profile: 2014 is the third year Tim Hortons landfill waste, recycling, organics and waste diversion rates were calculated. Landfill, recycling, and organics totals reflect either actual waste amounts or have been estimated to account for volume to weight conversions and/or to account for year-end waste amounts. The unit of measurement is tonnes.

Tim Hortons: refers to corporate offices, manufacturing facilities (Maidstone Coffee roasting plants and Fruition Fruits & Fills), and distribution centres. At this time, waste from corporate-owned restaurants is not included due to data limitations. Note that over 99% of our restaurants are franchised and independently operated. Also, unlike most other quick service restaurant companies, Tim Hortons employs significant use of vertical integration. Please see the Value Chain section of this Report for more information about our unique business model.

Landfill waste: Where ‘amounts to landfill’ required estimation due to volumes being provided rather than weights, an average volume-to-weight conversion ratio was employed. The average volume-to-weight conversion ratio was supplied by Spinnaker Recycling Corp.

Recycling and organics: Where ‘amounts to recycling’ required estimation due to volumes being provided rather than weights, an average volume-to-weight conversion ratio was employed. The average volume-to-weight conversion ratio was supplied by Spinnaker Recycling Corp. Additional conversion ratios were sourced from the United States Environmental Protection Agency’s Standard Volume-to-Weight Conversion Factors, Appendix B.

Corporate offices: Due to data limitations, waste data from our Lachine (Quebec) office and Brighton (Michigan) office are not included at this time.

Construction Waste: In general, waste generated from a significant construction project will be the responsibility of the outside contractor, and will be excluded from the Tim Hortons waste profile. This will vary by facility and by construction project. For projects where the contractor is responsible for the waste it will be excluded from the Tim Hortons waste profile.